To build a fourth national carrier, SpaceX needs a cellular network
SpaceX has made no secret of its ambitions to build a fourth major cellular network in the U.S.
SpaceX is reportedly in talks to buy Boost Mobile or lease its cellular network. Having targeted $1 trillion of revenue in 2027, Elon Musk's rocket launch and satellite-technology company is making a play to create a fourth national wireless carrier and exploit a market opportunity estimated around $235 billion.
The story was carried in the Washington Post on Monday and cited two people familiar with the negotiations , reigniting the discussion of Musk's ambitious plans for SpaceX (SPCX). Just over a week ago, a published report surfaced of Musk's exploratory talks with tower operator Crown Castle $(CCI)$, and a Citi research note published at that time highlighted several cellular providers and tower operators as buying opportunities given the SpaceX push into the sector. The parent company of Boost Mobile, EchoStar Corp. (ECHO) was one of those names mentioned in the Citi report.
The Washington Post article suggests that Musk had approached all three major telecoms providers - AT&T (T), Verizon (VZ) and T-Mobile $(TMUS)$ - with requests for network access but had been rebuffed. At present the SpaceX satellite network doesn't have the low-spectrum coverage and in-building access to build a comprehensive mobile service. This is why Musk has been involved in extensive efforts to reach a deal with someone prepared to offer him this.
The competitive threat posed by SpaceX discouraged the three major national carriers but buying into Boost Mobile could represent a back-door entry for Musk. Boost leases its network from AT&T and T-Mobile, according to the Washington, Post but at this stage there's no certainty that any deal would require their permission.
Market commentator Jim Cramer weighed in on the developments in a posting on X, saying the putative deal "would end any question that it (SpaceX) doesn't have the reach to compete."
SpaceX shares have been caught up in the broader tech-sector correction of the last month, and its stock has declined by around a fifth in that time and subscribers to this summer's IPO at $135 are showing no positive return yet. The Washington Post story sparked some upbeat trading Monday, however, and the shares were changing hands pre-market at $137.74, up 2.25%.
Speculative activity in EchoStar saw its stock jump more than 5% before the open, to trade around $102.50.
The rumors were less well-received by the three major carriers, Verizon, T-Mobile and AT&T, however. All three were showing lower prices early Monday.
-Jules Rimmer
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